Our primary objective is to determine the molecular events that regulate viral and eukaryotic gene expression. A better understanding of these processes may lead to effective antiviral chemotherapy. During the past year, we have continued studies on the enzymes that modify the 5' end of viral and cellular mRNA. The mechanism of capping was deduced by the demonstration of a HeLa cell capping enzyme - GMP covalent intermediate similar to that previously found for vaccinia virus capping enzyme. The isolation of two separate HeLa cell RNA (nucleoside-2'-)methyltransferases that catalyze the formation of cap I and cap II structures, respectively, extended our knowledge of RNA processing. Because vaccinia virus is an excellent system for studying gene expression, considerable effort was devoted to the mapping of viral RNA transcripts. Virtually the entire genome has now been cloned in phage or plasmid vectors and a preliminary map of more than 70 early and 40 late polypeptides was constructed. More detailed analysis of mRNAs encoded within the left 20 kilobase pairs of the genome indicated the absence of RNA splicing. DNA sequence analysis suggested that the vaccinia virus RNA polymerase recognizes unique signals for initiation and termination of transcription.